LANSING — Michigan brewers and winemakers could receive tax credits on beer and wine made with a certain percentage of local ingredients under a proposal in the state Legislature.

Rep. Doug Geiss, D-Taylor, introduced House Bill 5275 to encourage the use of Michigan grown and produced products in beer, wine, mead and cider.

While many Michigan-produced wines are made with locally sourced fruit, it's more difficult for brewers to find enough Michigan-grown hops and barley.

Under the proposal, tax credits would be available starting next year for beer made with at least 20 percent Michigan-produced hops and 40 percent of other ingredients from the state.

Wine, mead or hard cider produced with at least 40 percent Michigan ingredients could also qualify.

Starting in 2020, beer would have to include at least 40 percent Michigan-grown hops and 50 percent of other ingredients from the state, while wine, mead and cider would have to get half of its ingredients from Michigan to be eligible for a tax credit.

Producers would receive 8 cents per gallon on the first 500,000 gallons sold and 4 cents per gallon after that with a cap of 15 million gallons. The bill also allows certain producers to continue receiving tax credits if there's a natural disaster that destroys the necessary ingredients.

For example, if Bell's Brewery Inc., the state's largest beer maker, were to source all of its beer by these standards, it would have received tax credits worth $327,520 based on 2013 production of nearly 7.7 million gallons. Fellow Kalamazoo company Arcadia Brewing Co. would have received about $32,000 based on 2013 production of nearly 400,000 gallons.

Eligible products also could use a "Michigan farm to glass" label.

"It will support brewers and their investment here in Michigan," Geiss said. "I expect that this will help encourage malters to locate in Michigan, because right now the grain that is produced in Michigan that is used for brewing, has to be sent out of state for malting."

Michigan has just two craft malting operations, not nearly enough to meet demand, according to a recent Bridge Magazine article on how the shortage is limiting Michigan's craft beer industry.

That makes it difficult for brewers to reach the proposed tax credit requirements, said Scott Graham, executive director of the Michigan Brewers Guild.

"There just isn't a lot of supply of malted barley and malted wheat, although there is some," he said.

Michigan-grown hops are more plentiful and are gaining popularity among brewers. A tax credit may compel more in-state brewers to buy hops from Michigan instead of cost-competitive Pacific Northwest growers.

Geiss got the idea from a New York state proposal, which offered similar tax incentives. That proposal also has been criticized for unrealistically high requirements given the capacity of the state's hop and barley industries. Geiss said he's open to suggestions to improve his proposal.

It sounds like winemakers would be more likely to get tax credits under the current proposal. More than 100 wineries are part of the Michigan Grape and Wine Industry Council, which estimates about half of its members' wine volume uses Michigan-grown fruit.

"The council has not had a chance to review this specific bill language yet, but generally the council supports measures that encourage the use of Michigan fruit in wines produced in Michigan," said Linda Jones, council program manager.